As temperatures dropped, wholesale gas and electricity prices (1 year forward) continued to push ahead last week both rising by around 5%. While the rate at which wholesale prices have increased has slowed in the past month, nevertheless both gas and electricity prices are almost double their 2007 lows and at uncomfortable levels as far as the implications for domestic energy consumers are concerned.
Current forward wholesale gas prices are now indicating a medium/high risk of a 10% increase in Standard gas prices. Current forward wholesale electricity prices are now no longer indicating scope for any cuts in retail electricity prices.
The trend in wholesale prices has continued to edge ahead now making the prospect of near term increases in retail energy prices that much more likely.
With Standard retail prices now looking cheap compared to wholesale prices then, by implication, the cheapest online deals, which typically trade at an 8-10% discount to Standard prices, are now clearly under-priced compared to current wholesale rates. Therefore, we are now strongly advising customers that they should not just check deals but actively switch to a cheaper deal before these deals get withdrawn. In particular we recommend the Price Fix 2008 product from Scottish and Southern Energy, which combines a very competitive tariff with fixed prices until 30th November 2008, offering protection in the event of further increases in retail prices.
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